Date of Award:


Document Type:


Degree Name:

Doctor of Philosophy (PhD)


Economics and Finance

Department name when degree awarded


Committee Chair(s)

B. Delworth Gardner


B. Delworth Gardner


Jay C. Andersen


Kenneth S. Lyon


Bartell C. Jensen


Herbert H. Fullerton


Lower real incomes in the agricultural sector compared with other sectors of the economy have led to continued migration of rural people to urban areas. Despite this movement of surplus people from farm areas, incomes in the rural sector have failed to keep pace with those in urban areas. Fewer social amenities and other conveniences have also contributed to rural-urban migration.

This reduction in rural population and the consequent reduction in the economic bases of many rural communities has raised some interesting questions about city and rural government consolidation. What sizes of cities should be encouraged in the rural areas, and how can those services and other amenities which are provided in urban cities be supplied to rural areas.

For planning efforts to be successful in solving these problems, it is essential to have some knowledge of the sizes of cities which can provide public services and other amenities at least cost. It was assumed in this study that the tendency for farm families to move their families into the towns and cities had been completed. It was hypothesized that as cities become larger economies of scale in the provision of public services will be downward sloping, but that transportation costs associated with travel to farms, marketing of crops, etc. will rise. The summation of a declining public service function and a rising transportation function would give an aggregate long-run average total cost function whose minimum would define the optimum city sizes.

Mathematical models were developed to estimate these functions and the relationships between them. The models were then applied to five different types of farm enterprises and road configurations. The public service functions showed the expected U shape with the minimum occurring at approximately 130,000 to 140,000 population. The transportation functions were positive in nature but increasing at a decreasing rate. When the two functions were aggregated, the rate of change in the transportation function was much greater than that for the public service function causing the former to overpower the latter.

Most studies of economies of scale based on per capita public service costs alone have concluded that cities must be very large to provide these services at minimum cost. The results of this study lead to the conclusion that when transportation costs are considered along with public service costs, the optimal size of city will be much smaller than is commonly believed. This suggests that there is still a place for small sized cities and that planners should think in terms of perhaps a three-level hierarchy of cities. The city hierarchy might include a few large central cities, many service centers and numerous local towns. If small cities do not have large enough economic bases to provide adequate services it may be cheaper in the long run to provide financial aid in the form of subsidies rather than to incur the heavy transportation costs associated with larger city sizes.



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